Update 4 July 2018
This SS has been updated to reflect changes in terminology as a result of the publication of Policy Statement 15/18 ‘Strengthening individual accountability in insurance: Extension of the Senior Managers and Certification Regime to insurers’.
The purpose of this supervisory statement is to identify, for the boards of firms regulated by the Prudential Regulation Authority (PRA), those aspects of governance to which the PRA attaches particular importance and to which the PRA may devote particular attention in the course of its supervision. It is not intended to provide a comprehensive guide for boards of what constitutes good or effective governance. There are more general guidelines for that purpose, for example the UK Corporate Governance Code, published by the Financial Reporting Council.
As set out in the PRA approach documents, the PRA expects the boards and management of regulated firms to run the business prudently, consistent with the firm’s own safety and soundness and the continuing stability of the financial system.
Where the collective responsibilities of directors set out in this supervisory statement relate directly to individual responsibilities in the PRA’s rules and supervisory statements underpinning those regimes, the PRA’s expectations of firms and the requirements on individuals should be interpreted as being complementary.
The statement applies generally to PRA-regulated firms, including, banks, insurers, designated investment firms, building societies, friendly societies and credit unions, though it is recognised that different governance models may apply depending on the nature and size of the firm and any wider group and that expectations of boards should also be proportionate.
The PRA’s expectations of boards will also be influenced by the recovery and resolution strategies for the firm or the group, taking account of the extent to which the PRA would need to be satisfied that the board of a significant PRA-regulated subsidiary is constituted and performs in a way that shows that they are capable of independent action.